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PROJECT MANAGEMENT
LESSON 1
1
References
2
• Clifford F Gray and Erik W Larson. 2000. Project Management: The Managerial Process. McGraw Hill.
• Harold Kerzner. 2003. Project Management: A Systems Approach to Planning, Scheduling and Controlling. John Wiley & Sons.
PROJECT
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A project is a complex, non-routine, one-time effort limited by time,
budget, resources, and performance specifications designed to meet
customer needs
The major goal: to satisfy a
customer’s need
The major goal: to satisfy a
customer’s need
A project can be considered to be any series of activities and tasks that have the
major characteristics
A project can be considered to be any series of activities and tasks that have the
major characteristics
Project (Kerzner)
4
A project can be considered to be any series of activities and tasks that:
• Have a specific objective to be completed within certain specifications
• Have defined start and end dates
• Have funding limits (if applicable)
• Consume human and nonhuman resources (i.e., money, people, equipment)
• Are multifunctional (i.e., cut across several function lines)
Major Characteristics of Project
An established objective
• Have a specific objective to be completed within certain specifications
A defined life span with a beginning and an end
• Have defined start and end dates
Usually, the involvement of several departments and professionals
• Are multifunctional (i.e., cut across several function lines)
Typically, doing something that has never been done before
Specific time, cost, and performance requirements
• Have funding limits (if applicable)
• Consume human and nonhuman resources (i.e., money, people, equipment)
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The Project Life Cycle (1)
The life cycle recognizes thatprojects have a limited life spanand that there are predictablechanges in level of effort andfocus over the life of the project
The life cycle recognizes thatprojects have a limited life spanand that there are predictablechanges in level of effort andfocus over the life of the project
Definition
Planning
Execution
Delivery
Four typically stages:
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Project effort starts slowly, builds to peak, and then declines to delivery of the project to the
customer
Project effort starts slowly, builds to peak, and then declines to delivery of the project to the
customer
The Project Life Cycle (2)
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• Definition
– specifications of the project are defined
– project objectives are established
– teams are formed
– major responsibilities are assigned
The Project Life Cycle (3)
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• Planning
– The level of effort increases
– Plans are developed to determine:
• What the project will entail
• when it will be scheduled
• whom it will benefit
• what quality level should be maintained
• what the budget will be
The Project Life Cycle (4)
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• Execution– A major portion of the project work takes place—
both physical and mental
– The physical product is produced
– Time, cost, and specification measures are used for control• Is the project on schedule, on budget, and meeting
specifications
• What are the forecasts of each these measures
• What revisions/changes are necessary
The Project Life Cycle (5)
10
• Delivery
– Delivering the project product to the customer
• Customer training
• Transferring documents
– Redeploying project resources
• Releasing project equipment/materials to other projects
• Finding new assignments for team members
The Project Life Cycle (2)
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Project Management (1)
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Is the art of creating the illusion that any outcome is the result of a series of predetermined, deliberate acts when, in fact, it was dumb luck
Is the planning, organizing, directing, and controlling of company resources for a relatively short-term objective that has been established to complete specific goals and objectives.
Furthermore, project management utilizes the systems approach to management by having functional personnel (the vertical hierarchy) assigned to a specific project (the horizontal hierarchy)
Project Management (2)Involves project planning and project monitoring
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• Definition of work requirements
• Definition of quantity and quality of work
• Definition of resources needed
• Definition of work requirements
• Definition of quantity and quality of work
• Definition of resources needed
Project planning
• Tracking progress
• Comparison actual outcome to predicted outcome
• Analyzing impact
• Making adjustments
• Tracking progress
• Comparison actual outcome to predicted outcome
• Analyzing impact
• Making adjustments
Project monitoring
Project Management (3)The Importance of Project Management
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Compression of the Product Life
Cycle
Global Competition
Knowledge Explosion
Corporate Downsizing
Increased Customer Focus
Rapid Development of Third World and
Closed Economies
Small Projects Represent Big
Problems
Project Management (4)
15
‘ Within the allocated time period
• Within the budgeted cost
• At the desired performance/technology level (at the proper performance or specification level)
• While utilizing the assigned resources effectively and efficiently
• With acceptance by the customer/user
• With minimum or mutually agreed upon scope changes
• Without disturbing the main work flow of the organization
• Without changing the corporate culture
Successful project
management
Successful project
management
Project Management (5)The potential benefits
16
Identification of functional responsibilities to ensure that all activities are accounted for, regardless of personnel turnover
Minimizing the need for continuous reporting
Identification of time limits for scheduling
Identification of a methodology for trade-off analysis
Measurement of accomplishment against plans
Early identification of problems so that corrective action may follow
Improved estimating capability for future planning
Project Management (6)
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Project complexity
Customer’s special
requirements and scope changes
Organizational restructuring
Project risks
Changes in technology
Forward planning and
pricing
The Benefits Cannot Be Achieved Without Overcoming Obstacles
The Project Manager (1)
18
Management decides and implements the ways and means to effectively and efficiently utilize human and
nonhuman resources to reach predetermined objectives (money, manpower, equipment, facilities, materials,
information/technology)
Project managers perform the same functions as other
managers: they plan, schedule, motivate, and control
The project manager is unique because she/he manages temporary, non-repetitive
activities and frequently acts independently of the formal
organization
The Project Manager (2)
19
Project managers are expected to marshal resources to complete a fixed-life project on time, on budget, and within specifications
Project managers are the direct link to the customer and must manage the interface between customer expectations and what is feasible and reasonable
Project managers provide direction, coordination, and integration to the project team, which is often made up of part-time participants loyal to their functional departments
The Project Manager (3)
20
Project managers are responsible for performance (frequently with too little authority)
Project managers must ensure that appropriate trade-offs are made between the time, cost, and performance
requirements of the project
Project managers generally posses only rudimentary technical knowledge to make such decisions
Project managers must orchestrate the completion of the project by including the right people, at the right time, to
address the right issues and make the right decisions
The Project Manager-Line Manager Interface
21
• A good daily working relationship between the project manager and those line managers who directly assign resources to projects
• The ability of functional employees to report vertically to line managers at the same time that they report horizontally to one or more project managers
Successful project
management is strongly dependent
on:
The project manager actually works for the line managers, not vice versa the project manager is simply the agent
through whom this is accomplished
Projects manager
depend on line managers
Effective project management requires an understanding of:
Quantitative tools and
techniques
Organizational structures
Organizational behaviour
22
The Project Manager’s Role
23
The project manager is responsible for coordinating and integrating activities across multiple functional lines
• to develop a project plan
• to execute the plan
• to make changes to the plan
The integration activities performed by the project manager include integrating the
activities necessary to
The project manager must convert the inputs into outputs of products, services, and ultimately profits
The project manager needs strong communicative and interpersonal skills, must become familiar with the operations of each line organization, and
must have knowledge of the technology being used
The Line Manager’s Role (1)A Specific Role For The Functional Manager
24
The functional manager has the responsibility to define how the task will be done and where the task will be
done (i.e., the technical criteria)
The functional manager has the responsibility to define how the task will be done and where the task will be
done (i.e., the technical criteria)
The functional manager has the responsibility to provide
sufficient resources to accomplish the objective
within the project’s constraints (i.e., who will
get the job done)
The functional manager has the responsibility for
deliverable
The Line Manager’s Role (2)The line manager’s problems:
25
Unlimited work requests (especially during competitive bidding)
Predetermined deadlines
All requests having a high priority
Limited number of resources
Limited availability of resources
Unscheduled changes in the project plan
Unpredicted lack of progress
Unplanned absence of resources
Unplanned breakdown of resources
Unplanned loss of resources
Unplanned turnover of personnel
The Evolution of Project Management Systems (1)
26
A Three-phase Model
Phase One: Ad Hoc Use
Phase Two: Formal
Application
Phase Three: Project-Driven
Organization
The Evolution of Project ManagementSystems (2)
Phase One: Ad Hoc Use
27
Typically begins with an individual or department champion initiating the use of one or more the basic project management
tools in a project
The tools appear to hold potential for improving project
success
Top management will have little or no involvement in the decision to use these
tools
In a few cases, these attempts end in failure
Near the end of this phase, conflicts
across functional lines often appear as tensions arise over the control and directions of
projects
The Evolution of Project Management Systems (3)
Phase Two: Formal Application
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Various needs and inadequacies are
recognized as barriers to project
success
Typical of this phase is the recognition that project management training is
needed for every management level in the
organization
Top management takes an interest in better
management of projects
The need for quality control
becomes an issue
The concept of a customer or client for each project becomes
part of the organizational culture
Projects managers are given more control over the
projects
Questions relating to the effectiveness of the
current organization structure are heard in private conversations
Top management is not active in project
selection and prioritizing projects
Management needs a retreat to integrate
strategic planning and projects
The Evolution of Project Management Systems (4)
Phase Three: Project-Driven Organization
29
The outlook is long
run
Top management is now playing a
significant role in setting strategy, in
developing a balanced project portfolio, and
in setting project priorities
Project management is a
part of the
organizational
culture
The organizational structure has
shifted toward a project matrix
and project teams with dedicated resources
Projects are integrated
with accounting
Training and policy
manuals have been written
for each phase of the project life
cycle
Termination of projects includes
a project audit and evaluation of
time, cost, and technical
performance
The outcome of this effort is disciplined,
integrated, organizational approach to
managing and implementing
projects linked to strategic plans
The Evolution of Project Management Systems (5)
30
These three phase occur at different times
depending on the type and size of the firm
It is probably desirous to move to phase three as
quickly as possible to compete more effectively
Migration to excellence can be expedited by developing the skills and capabilities of every manager in the
organization through training in project management
An Integrative Approach (1)
31
• Piecemeal systems fail to tie to the overall strategies of the firm
• Piecemeal project priority systems fail to prioritize project selection to resources and those projects that contribute most to the strategic plan
• Piecemeal tools and techniques fail to be integrated throughout the project life cycle
• Piecemeal approaches fail to balance the application of project planning and control methods with appropriate adjustments in the organization’s culture to support project endeavour
• Piecemeal systems fail to tie to the overall strategies of the firm
• Piecemeal project priority systems fail to prioritize project selection to resources and those projects that contribute most to the strategic plan
• Piecemeal tools and techniques fail to be integrated throughout the project life cycle
• Piecemeal approaches fail to balance the application of project planning and control methods with appropriate adjustments in the organization’s culture to support project endeavour
As the world becomes more
competitive, the importance
of managing the process of
project management and “getting it right the first
time” takes on new meaning
As the world becomes more
competitive, the importance
of managing the process of
project management and “getting it right the first
time” takes on new meaning
An Integrative Approach (2)
32
Integration in project management directs attention to two key areas:
Integration of projects with the strategic plan
Integration within the process of managing actual projects
Today emphasis is on development of an integrated project management process that focuses all project effort toward the strategic plan of the organization and reinforces mastery of both the project management tools/techniques and the interpersonal skills necessary to orchestrate
successful project completion
An Integrative Approach (3)Integration of projects with the strategic plan
33
In some organizations, selection and management of projects often fail to support the strategic plan of the organization
• Strategic plan are written by one group of managers, projects selected by another group, and projects implemented by another
An integrated project system is one in which all of the parts are interrelated
• Mission, objectives, and strategies are set to meet the needs of customers
• Development of a mission, objectives, and strategies depend on the external (political, social, economic and technological) and internal (management, facilities, core competencies, financial condition) environmental factors
Implementing strategies are the most difficult step; strategies are typically implemented through projects
• Prioritizing projects so that scarce resources are allocated to the right projects
An
Integrative A
pp
roach
(4)
34
Scope
Work Breakdown Organization
Networks Leadership
Resources Teams
Cost Partners
Customer
Environmental Analysis
Project Implementation
Environment
and cultureSystem
Projects
External Internal
Firm
Mission
Goals, Strategies
Priorities
An Integrative Approach (5)Integration within the process of managing
actual projects
35
The technical side of the
management process
• Consists of the formal, disciplined, pure logic parts of the process
• Relies on the formal information system available
• Includes planning, scheduling, and controlling: Scope, WBS, Schedules, Resource Allocation, Baseline Budgets, Status Reports
• Represents the “science” of project management
The socio-cultural side of
the management
process
• Involves the much messier, often contradictory and paradoxical world of implementation: leadership, problem solving, teamwork, negotiation, politics, customer expectations
• Centres on creating a temporary social system within a larger organizational environment that combines the talents of a divergent set of professionals working to complete the project
• Involves managing the interface between the project and external environment
• Represents the “art” of managing a project
“Project-Driven” versus “Non-Project-Driven” Organizations
36
Project-Driven OrganizationProject-Driven Organization
• All work is characterized through projects, with each project as a separate cost centre having its own profit-and-loss statement
• The total profit to the corporation is simply the summation of the profits on all projects
• Everything centres around the projects
Non-Project-Driven Organization
Non-Project-Driven Organization
• Profit-and-loss are measured on vertical or functional lines
• Projects exist merely to support the product lines or functional lines
• Priority resources are assigned to the revenue-producing functional line activities rather than the projects
Project-Driven versus Non-Project-Driven Organizations
37
Project management in a non-project-driven organization is generally more difficult for these reasons:
• Projects may be few and far between
• Not all projects have the same project management requirements, and therefore they cannot be managed identically. This difficulty results from poor understanding of project management and a reluctance of companies to invest in proper training
• Executives do not have sufficient time to manage projects themselves, yet refuse to delegate authority
• Projects tend to be delayed because approvals most often follow the vertical chain of command. As a result, project work stays too long in functional departments
• Because project staffing is on a “local” basis, only a portion of the organization understands project management and sees the system in action
• There is heavy dependence on subcontractors and outside agencies for project management expertise
• Projects may be few and far between
• Not all projects have the same project management requirements, and therefore they cannot be managed identically. This difficulty results from poor understanding of project management and a reluctance of companies to invest in proper training
• Executives do not have sufficient time to manage projects themselves, yet refuse to delegate authority
• Projects tend to be delayed because approvals most often follow the vertical chain of command. As a result, project work stays too long in functional departments
• Because project staffing is on a “local” basis, only a portion of the organization understands project management and sees the system in action
• There is heavy dependence on subcontractors and outside agencies for project management expertise
Project-Driven versus Non-Project-Driven Organizations
38
Non-project-driven organizations may also have a steady stream of projects, all of which are usually designed to enhance manufacturing operations.
Some projects may be customer-requested, such as:
• The introduction of statistical dimensioning concepts to improve process control
• The introduction of process changes to enhance the final product
• The introduction of process change concepts to enhance product reliability
Project-Driven versus Non-Project-Driven Organizations
39
• Poorly defined responsibility areas within the organization
• Poor communication, both internal and external to the organization
• Slow implementation
• A lack of a cost-tracking system for implementation
• Poorly defined performance criteria
If these changes are
not identified as
specific projects, the
result can be:
Project-Driven versus Non-Project-Driven Organizations
40
The tip-of-the-iceberg syndrome can occur in all types of organizations but is most common in non-
project-driven organizations
On the surface, all we see is lack of authority for the project manager. But, beneath the surface we see the causes; there is excessive meddling due to
lack of understanding of project management, which, in turn, resulted from an inability to
recognize the need for proper training
Project-Driven versus Non-Project-Driven Organizations
41
Delegation of
authority to
project manager
Excessive meddling
Lack of understanding of how project management
should work
Lack of training in communication/interpersonal skills
Many of the problems surface much later in the project
and result in a much higher cost to correct as well as
increase project risk
Marketing in the Project-Driven Organization
42
Marketing projects requires the ability to identify, pursue, and capture one-of-a-kind business opportunities, and
is characterized by:
A systematic effort
Custom design
Project life cycle
Marketing phase
Risks
The technical capability to perform
Getting new projects is the lifeblood of any project-
oriented business
In spite of the risks and problems, profits on projects
are usually very low in comparison with commercial
business practices
One may wonder why companies pursue project
businesses
Marketing in the Project-Driven Organization
Reasons why projects are good business
43
• Progress payment practices keep inventories and receivables to a minimum and enable companies to undertake projects many times larger in value than the assets of the total company
Although immediate profits (as a percentage of sales) are
usually small, the return on capital investment is often very
attractive.
• The company has little additional selling expenditure and has a predictable market over the life cycle of the project
Once a contract has been secured and is being managed properly, the project may be of relatively low financial risk to
the company.
• Projects provide an opportunity to develop the company’s technical capabilities and build an experience base for future business growth
Project business must be viewed from a broader
perspective than motivation for immediate profits.
• (1) growth with the project via additions and changes; (2) follow-on work; (3) spare parts, maintenance, and raining; and (4) being able to compete effectively in the next project phase, such as nurturing a study program into a development contract and finally a production contract
Winning one large project often provides attractive growth
potential, such as
Classification Projects
44
Type of Project/Industry
In-house R&D
Small Constructio
n
Large Constructio
n
Aerospace/Defence
MIS Engineering
Need for interpersonal skills
Low Low High High High Low
Importance of organizational structure
Low Low Low Low High Low
Time management difficulties
Low Low High High High Low
Number of meetings
Excessive
Low Excessive Excessive High Medium
Project’s manager supervisor
Middle management
Top management
Top management
Top management
Middle management
Middle management
Classification Projects
45
Type of Project/Industry
In-house R&D
Small Construc
tion
Large Construc
tion
Aerospace/Defence
MIS Engineer-ing
Project sponsor present
Yes No Yes Yes No No
Conflictintensity
Low Low High High High Low
Cost control level
Low Low High High Low Low
Level of planning/ scheduling
Milestones only
Milestones only
Detailed plan
Detailed plan
Milestones only
Milestones only
46